European bank shares surged on Thursday, with the STOXX Europe 600 banking index <.SX7P> spiking 9.2 percent and on track for its biggest one-day gain since May 2010, after euro zone leaders agreed on a deal to resolve the debt crisis.

Credit Agricole , Societe Generale , BNP Paribas , Deutsche Bank and Royal Bank of Scotland were up between 15.6 and 22.9 percent.

The banking sector has been hit hard on concern that a Greek debt default would lead to big losses for them and potentially a banking crisis.

Despite Thursday's rally, the sector is still down nearly 24 percent in 2011.

(Reporting by Dominic Lau)